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A manager has determined that a potential new product can be sold at a price of $25 each. The cost to produce the product is $17.5, but the equipment necessary for production must be leased for $75,000 per year. What is the break-even point

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abiolataiwo2015

Answer:

10,000 units

Explanation:

Calculation to determine the break-even point

Using this formula

Break-even point = Fixed cost / [Selling Price - Cost Price]

Let plug in the formula

Break-even point = $75,000 / [$25 - $17.5]

Break-even point = $75,000 / [$7.5]

Break-even point = 10,000 units

Therefore the break-even point is 10,000 units

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